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The ‘Very Serious’ Tradition of the Internal Revenue Service
Our tax-collecting agency has been called “an invitation to corruption” for decades.


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Jim Geraghty

To take just one example, in 2012 a former IRS agent pleaded guilty in Connecticut, “moments after a federal prosecutor accused him in an opening statement to jurors of claiming deductions that included the price of treats for his dog and a ring he was stuck with after a broken engagement.”

There’s also the 2012 case in California of a former IRS agent who “was sentenced to nearly three years in federal prison for his role in a securities fraud scheme that bilked hundreds of people across the U.S. out of more than $8 million.”

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That case was separate from another 2012 California case, in which a “former Internal Revenue Service agent and tax preparer pleaded guilty to a dozen felonies . . . in connection with a plot to kill four witnesses against him in a criminal fraud case.” Is tax fraud a gateway crime to hiring a hit man?

But those examples from last year shouldn’t be confused with a 2011 California case of “a former Internal Revenue Service agent filing fraudulent tax returns for himself and unsuspecting relatives . . . from 2003 to 2007,” who was ultimately sentenced to three years in federal prison.

Then there was the 2011 Iowa case of a former IRS criminal-investigative agent who was barred from preparing tax returns for others after claiming $21 million in fraudulent deductions.

And there’s the 2011 case in Delaware of a former IRS agent who pleaded guilty to helping to prepare a fraudulent tax return; prosecutors alleged the former agent “routinely included false deductions and credits on his clients’ tax forms.”

And the 2011 case in Reno of a man “using his IRS agent status to recruit young women into illegal prostitution.”

And in 2009, “a retired Internal Revenue Service agent, Thomas W. Steelman, 72, of Blue Springs” was “sentenced to 46 months in federal prison for his role in a tax fraud scheme.”

That followed a case in 2008, when a 25-year veteran of the IRS pleaded guilty to tax evasion.

Which is not to be confused with the time an IRS employee was caught taking stolen property in 2007:

Robert O. Steven and his wife Patricia were charged with receipt of stolen property in connection with a scheme allegedly run by Harriette Walters of the District of Columbia’s Office of Tax and Revenue. Walters and several of her co-workers and relatives have been accused of awarding at least $20 million of bogus property tax refunds that they used to purchase homes, cars and luxury goods.

Steven and his wife allegedly deposited at least 11 checks totaling over $2.8 million into an account they had opened. The now-separated couple are accused of using some of the money to purchase four Jaguar cars for a total of $257,866.

Which is separate from the 2007 case of a former IRS agent in Oklahoma pleading guilty to wire fraud and money laundering. Or the 2006 conviction of a former IRS agent in California on charges of conspiracy to commit tax fraud, or the 2003 conviction of a former IRS investigator who became a mob accountant in Cicero, Ill.

The Internal Revenue Service would be quick to emphasize that they can’t control the actions of their former employees. But there does seem to be a strange, widespread pattern of former employees’ accumulating extensive knowledge of how tax investigations work, then leaving and using that knowledge to help criminals. It’s almost as if the culture of the organization were somehow insufficient in demonstrating the consequences of abusing power or the public’s trust. For all of the assurances to the public that the organization’s management takes all of these matters “very seriously,” these employees and former employees certainly didn’t seem to behave as if that were the case.

Back in 1992, experts in the IRS’s culture and methods concluded that a combination of enormous power and limited oversight made an irresistible formula for abuse of power:

“The IRS is an invitation to corruption. It is a continuing problem in every big bureaucracy, particularly the IRS, and it’s ignored,” says David Burnham, a former New York Times reporter whose late-1980s investigations of the IRS turned up substantial corruption at senior-management levels.

In his 1989 book, A Law Unto Itself: The IRS and the Abuse of Power,” Mr. Burnham argued that corruption is a more continuing problem than the IRS admits. Each case of corruption, he writes, “is also prima facie evidence of pervasive poor management.”



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